Foxconn executives arrested for demanding millions in kickbacks

Foxconn is in the news once again, but this time it’s not related to underage workers or wage disputes. According to the latest reports out of China, Taiwan officials have arrested nearly a dozen company managers on suspicion of soliciting kickbacks from iPhone parts suppliers.

Prosecutors claim that Deng Zhixian, director general for the Committee of Surface Mount Technology, and retired senior vice president Liao Wancheng were among those in on the scheme. Wancheng is believed to be the mastermind and although he wasn’t questioned on the same day, he was reportedly put under domestic surveillance.

As the report goes, companies wishing to be iPhone parts suppliers for Foxconn had to pay a 2.5 percent kickback and offer up an additional bribe to secure orders. That fee was later raised to three percent with Wancheng allegedly keeping the extra 0.5 percent for himself.

Prosecutors also claim Wancheng and several others set up a bogus overseas company to help assist with money laundering. Some of the laundered money reportedly made it back to Taiwan accounts, we’re told.

The gig was up when disgruntled suppliers reported the wrongdoings to Foxconn at which time CEO Guo Taiming launched an internal investigation. He ultimately filed a police report in Taiwan as well as in mainland China based on the findings.

Zhixian has denied the allegations against him but we’ll keep an eye on the story to see how it all plays out moving forward.